Exchange operator Cboe’s profit rises on swelled up trading volumes
11:42 am Friday, August 04th, 2023
By Jaiveer Shekhawat and Laura Matthews
(Reuters) – Exchange operator Cboe Global Markets on Friday reported a rise in its quarterly profit, driven by strong trading volumes as markets continue to rebound from last year.
Investors turned to Cboe’s proprietary products, such as options linked to the VIX volatility index and the S&P 500, as they rejigged portfolios to hedge against risks brought on by economic uncertainty.
Revenue from the company’s options segment grew 20% to $283.2 million in the quarter, driven by an increase in net transaction and clearing fees as well as market data and access fees.
“Our derivatives ecosystem continues to flourish in the second quarter as traders and investors utilize our … options products across an ever-changing market environment,” Cboe’s Chief Executive Ed Tilly said on an analyst call.
“We have created flexible products that provide opportunities for customers of all dimensions to trade a contract with the right size for them on a time frame that suits their unique needs.”
Volume in Cboe’s proprietary index options products increased 38% during the quarter, while demand for options contracts opened on the same day they expire, or 0DTE (zero-days-to-expiry), made up nearly 44% of overall SPX volume in the second quarter.
“We believe there has been a fundamental evolution in how customers are trading this product, and we anticipate this volume to continue,” said Tilly.
Cboe also saw strong volume in its standard monthly SPX options contracts expiring on the third Friday each month, with average open interest up 12% in June.
VIX options also saw a significant increase in trading, up 53% to an average daily volume of 778,000 contracts, giving Cboe it fourth-best quarter on record.
The Chicago-based group, which provides trading platforms for equities, foreign exchange and derivatives products across markets in different regions, saw its net revenue rise 10% to $467.1 million.
Cboe reported a net income of $188.7 million, or $1.78 per share, for the quarter ended June 30 on an adjusted basis, up from $177.3 million, or $1.67 per share, a year earlier.
Cboe’s results wrap up a strong quarter for exchange operators. Its peer, New York Stock Exchange-parent Intercontinental Exchange, also reported upbeat results on Thursday.
Cboe’s shares were up 3.2% to $144.50.
(Reporting by Jaiveer Singh Shekhawat in Bengaluru and Laura Matthews in New York; Editing by Milla Nissi and Sharon Singleton)
